Around this time last year, the annual Mediclaim premium for a 60-year-old seeking medical cover of Rs 1 lakh increased from Rs.5, 400 to Rs.10, 800, a 100 per cent jump. If this number comes as a shock, wait to consider that if this person had a cover of Rs. 8 lakh, then the premium actually went down from Rs 33,000 to Rs 31,130 – a fall of 5.7 per cent. In short, a richer person capable of taking a higher cover benefitted while a retiree looking for a basic cover might find it unaffordable, paying as high as 10 per cent of the cover being sought. These are rates quoted by the largest general insurance company in India, a public sector enterprise that is one of the better and more robust ones in the business. The story across the new premia charts for individuals is the same for all age brackets – the rich who can afford a higher cover pay relatively less while the poorer ones pay what essentially are penalty-like premia, particularly senior citizens. It must be noted that 80 per cent of health insurance is still covered by the public sector. The private sector has introduced a host of schemes but their working and customer response is far from desirable. The number of people covered overall is small. We know that “catastrophic healthcare related expenditure” pushes families into debt, with more than 24 per cent households in rural India and 18 per cent population in urban areas having met their healthcare expenses through some sort of borrowings, according to official data.
The numbers tell us about a lot of what is wrong with India’s health care system. First, it is the marketing of health as if this is like any other commodity. Buy more, pay less. Second, the increase in coverage cost is dramatic; it makes taking cover onerous for those who need it the most, when they need it the most. Third, the premia reflect the rising cost of health care in the Indian system not only for those who cannot afford it but also for those who would normally have the wherewithal to pay their fair share and are willing to take insurance – this is usually the middle and upper strata of society. In that, we are inching closer to the American system where people may skip seeing a doctor because they just can’t afford to do so, if they are uninsured. And finally, the premia reflect the manner in which insurance companies are paying huge claim ratios – often exceeding 100 per cent. This means the payouts exceed the premium collected under the scheme, making no business sense for the insurer. The result – ever rising premia and a vicious cycle that is making medical insurance increasingly meaningless for the ordinary citizens of India. At the root is a health care system that is a money-spinning racket. Anecdotal accounts of what goes on in the name of health care at the bigger hospitals and the mushrooming set of fancy nursing homes and older ones rechristened as “specialist” hospitals with gloss reception counters across India is nothing short of shocking and extremely distressing.
In this eco system comes the Ayushman Bharat – Pradhan Mantri Jan Aarogya Yojana (AB-PMJAY), which the Prime Minister Narendra Modi inaugurated last Sunday (Sep.23). The AB-PMJAY is grand and its purpose is to be lauded. It seeks to cover 10 crore families (or about 50 crore individuals) at the bottom of the socio-economic ladder, precisely the people who today have nowhere to go for their health needs and therefore suffer and often succumb to disease. This segment of the population is not covered by the insurance companies, given the high cost of coverage, so it’s the opening up of a new “market” and an experiment that can potentially transform the way in which health care works in the country. It is too early to say how the scheme will roll out and if it will succeed in giving the promised Rs. 5,00,000 cover per family per year, for secondary and tertiary care hospitalisation. There are important questions raised by some of the States linked to how the scheme will be funded. Some of these are well founded worries. At the same time, it is important to avoid taking political potshots that are very tempting when it is the current government announcing anything grand.
But this is a good time to enumerate some of the challenges of working in what is essentially a failing system with all the ills that have accumulated over the years, particularly in the private sector – rising costs, lack of transparency, targets for doctors, cuts for referrals, over-investigation to increase billings, hospitals like hotels and many of them as trusts on public land that mostly exclude the ordinary public from their services and have come to be known for gold plated healthcare for the privileged few. Many of the privately-run hospitals and nursing homes have made it their business (there are some exceptions, of course) to exclude the poor and exploit the rich. For an example, Maharashtra has issued show cause notices to hospitals who signed up under the Mahatma Jyotiba Phule Jan Arogya Yojana, which enrolls families with a joint income of less than Rs 1 lakh per annum to avail of health insurance of up to Rs 1.5 lakh annually. These private hospitals asked the patients to pay up in a form of naked violation that is becoming all too much the norm.
On the other hand, public hospitals are stretched and find that they are not funded well enough. As the National Health Profile, 2018, reported, India spends only one per cent of its GDP (2015-16) as public expenditure on health. Per capita public expenditure on health in nominal terms has gone up from Rs. 621 in 2009-10 to Rs. 1112 in 2015-16. The ratio of Centre to State share in total public expenditure on health was 31:69 in 2015-16. And the share of the Centre in total public expenditure on health has been declining steadily over the years (except in 2017-18). This means that the places where the poor seek treatment are underfunded and so cannot provide services.
AB-PMJAY is an opportunity for some big change in direction. Such an ambitious project can succeed only if the government is committed to increasing public health expenditure dramatically in the coming years and tying that in by sending a message that private sector hospitals must converge and offer to match up to the mission of providing universal health care. When it comes to health care, it is important to place medicines and equipment under price control but it is equally important to impose control on costs of doctors and hospitals. For an example, what is the use of controlling the price of heart valves when the price of the surgeon and the operation theatre jumps manifold year-on-year? The services under the AB-PMJAY scheme will include 1,350 procedures covering pre and post hospitalisation, diagnostics, medicines etc. If the costs of these can be standardised, then it will provide for the first time a government-certified kind-of benchmark of what might be called a fair charge.
In the end, there has to be pressure and punishment for the gross violations that have become the norm. It happened in the case of female foeticide – doctors did it with abandon till activists and the State came down with a heavy hand. A similar heavy hand is now required to curb malpractice, fraud and criminal overcharging that is rampant among doctors and hospitals today. AB-PMJAY, or Modicare as it is being called, will not succeed without that.
Jagdish Rattanani is a journalist and a faculty member at SPJIMR.
(Syndicate: The Billion Press)